Waves of Regulation • Waves of regulation and deregulation tend to follow crises • Progressive Era (1887-1914) : – In response to overwhelming market power of large companies, these regulations sought to limit the power of large firms and unfair competitive practices – Example: Sherman Antitrust Act in 1890 limited monopolies • New Deal (1930s): – In response to financial collapse, regulations were used to restore confidence in the financial system and to allow new industries to develop – Example: Glass-Steagall Act in 1933 created FDIC to insure bank deposits and the separation of commercial and investment banking to prevent conflicts of interest between those who grant credit (commercial banks) and users of credit (investment banks) which could put commercial banks at risk from bad investments. – Example: Securities and Exchange Commission (SEC) established in 1934 to prevent insider trading of stocks